The secretary of the Public-Private Association and Delegated Management, Roberto Salas, talks about the objectives and changes that are registered in the Investment Law, which was recently delivered to the Assembly for urgent treatment. He considers that this law gives an investor legal certainty, more transparency, more agility due to the reduction of steps (from 20 to 15 steps) and a broad system for dispute resolution. Salas considers that this is good news to generate confidence in the Ecuadorian context and put the country on the radar of investors, “so they know that they are dealing with a serious country.” In this way, projects can be carried out for “the benefit of employment and the improvement of services for Ecuadorians.”
What is the difference between Public Private Partnerships and delegated management?
Management delegated to private companies is an umbrella concept for public investment. Public projects with delegated management can be given through different contracts: some are for participation, others for services, administrative concessions, issuance of enabling titles, mining concessions. Another of the contracts is the Public Private Association or APP. Normally, the latter is adopted in projects that are not strategic or that do not have their own regulations for their processes. The strategic sectors have a regulation that has its own particularities, for example, it is indicated that it can be delegated exceptionally. In the case of other sectors such as public services, transportation, road infrastructure, ports, airports, school and hospital infrastructure, they are now regulated by this new law and the PPP figure that is applied in sectors that do not have specific regulation. .
Why is it necessary to go to these figures?
Public investments have two forms. The first is through a typical public procurement, which is with the State budget and that the State buys from its suppliers. The second is when the State does not have resources, but it does have a need for works, infrastructure or services, for which it chooses to make a contract between a public entity and a private actor of the popular and solidarity economy. In this model, the work is made viable, and risks and roles are assumed by both the public and private sectors. This allows the State to transfer risks and roles. This model must define how a reasonable and fair compensation is paid to the associate.
What is the difference between the law on APP and delegated management, with respect to what already existed in the productive laws?
In 2015, the PPP Incentives Law was issued, which, in our opinion, generated around five PPP projects: three ports, a highway and a dredging project. These five projects that were approved until 2017 were made with lax secondary regulations and since then there have been three regulations. The last of 2020 has not yet been used. The change now seeks to generate a new wave of PPPs, but that this regulatory body regulates all activities of thin management and PPPs so that it can provide more legal certainty, that projects come, contracts, works are generated, and with them services to citizens and, of course, at the end of the day that there is greater generation of jobs.
You have said that the delegated management projects, that is, the strategic ones, will continue with the same regulations of their own, but they will have to go to a registry, what is the use of this?
The registry helps us in three things. Improve the planning of public projects, since there is currently no multi-annual structured record. In addition, projects can be prioritized, and a third element is that by putting all the projects on a single platform we can increase their transparency so that any investor knows their situation, when they will be tendered, among other issues.
Since the government of LenÃn Moreno and then with that of President Guillermo Lasso, they have been talking about the need to concession Sacha, the Esmeraldas refinery, repower Termogás Machala, and they have been making progress on these issues. What will happen to these projects?
Most of these initiatives and others were established in a first catalog of $30,000 million that were revealed at the Open for Business. We believe that it is one thing to have projects identified and another thing is to manage them so that they become contracts and works. What we are looking for now is to give the Government that management capacity. For this, three factors are needed: a regulatory framework that allows gaining legal certainty, having well-structured and robust projects that result in good tenders and good contracts. Thirdly, to have a sufficient capacity to attract investors and financiers.
With this more powerful law, how many PPPs do you think can be achieved in a year or two and which ones are you betting on will come out sooner?
The goal is $30 billion in projects with completed contracts. Of these, the most advanced are the energy, renewable energies, where there are already six projects: three to sign contracts and three with tenders. There is also the mining sector with projects that must be specified. There are other hydroelectric projects such as Cardenillo and Santiago, which still need to be structured and will take more time. Other high-impact infrastructure issues such as the fifth bridge or the railway must still wait for the State to define what it needs. Both will be put out to tender at the beginning of 2023. Thus, in 2022, energy and mining projects will be the protagonists of an investment growth scheme. Then the hydrocarbon sector with the recovery of wells, refineries, and by 2023 the highways, the fifth bridge, the railway will come.
You indicate that financing is a key part of the projects. What has happened to the financing of the DFC, an entity with which the previous government signed an agreement?
The US government launched an important infrastructure program for the US and the region, which is very positive to be able to incorporate it as a source of financing for the country’s infrastructure projects. The B3W (Build, Back, Better Word) is a project that has been well received and is in the process of being implemented.
How does the issue of the restriction of financing affect the country, for example, from European banks to issues such as hydrocarbon projects in the Ecuadorian Amazon?
The trend of international financing is going to renewable technologies, that is very clear. This occurs above all in multilateral development banks and a part of the financial system. However, there is still financing for optimization of the hydrocarbon sector to support the orderly transition. (I)
Source: Eluniverso
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